Nasdaq Correction: 2 "Magnificent Seven" Stocks Down 19% and 21% You'll Regret Not Buying on the Dip

Anthony Di Pizio, The Motley Fool

Sat, Mar 15, 2025, 10:00 AM 7 min read

The Nasdaq-100 is made up of 100 of the largest nonfinancial companies listed on the Nasdaq stock exchange. It has delivered a return of 343% over the past decade, doubling the gain of the more diversified S&P 500 thanks to its high concentration of the world's largest tech stocks.

But the Nasdaq-100 can also be more volatile during times of uncertainty, and it's currently in correction territory after a 13% decline from its recent peak. Some of the largest constituents in the index, namely the "Magnificent Seven," are leading the decline. This group of seven companies earned their nickname for their tendency to outperform the broader market (notwithstanding the occasional rough patch) and their incredible size. Here they are, along with their recent market caps:

1. Apple: $3.1 trillion.

2. Microsoft: $2.8 trillion.

3. Nvidia: $2.8 trillion.

4. Amazon : $2.1 trillion.

5. Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG): $2 trillion.

6. Meta Platforms (NASDAQ: META): $1.5 trillion.

7. Tesla: $770 billion.

I want to focus on two of these stocks because of their attractive valuations relative to the rest of the group, and their potential to capitalize on emerging themes like artificial intelligence (AI). Shares of Meta Platforms and Alphabet are down 19% and 21%, respectively, from their record highs, and here's why investors might regret not buying them on the dip.

Meta Platforms is the parent company of the Facebook, Instagram, and WhatsApp social networks, which serve over 3.3 billion people every day. The company generates revenue by selling advertising slots to businesses, so the more ads it can show each day, the more money it makes.

Since almost half the world's population already uses Meta's apps, attracting new sign-ups is becoming harder, so the company is focusing on engagement instead. It's using AI in its recommendation engines to learn what type of content users like to see, so it can show them more of it to keep them online for longer.

Toward the end of 2024, CEO Mark Zuckerberg said this strategy drove an 8% increase year over year in the amount of time users spent on Facebook, and a 6% increase for Instagram.

Introducing new products is also part of management's engagement tool kit. The company launched an AI chatbot called Meta AI last year that is accessible through all of its existing apps.

Users can ask it questions on a variety of topics, or invite it into their group chats to settle debates and recommend fun activities. Meta AI had over 700 million monthly active users at the end of last year, which makes it one of the most popular chatbots in the world.